Dear Readers

Welcome to the July edition of MarketViews.

In September this year, listed Real Estate will be separated from the Financials sector and given its very own category in the Global Industry Classification Standard (GICS), which groups listed companies according to economic sector. Mark Mayer from Reitway Global explains what this will mean for the new Real Estate sector, REITs (Real Estate Investment Trusts), fund managers and investors.

Dwaine van Vuuren of Powerstocks Research investigates why the JSE ALL-SHARE index was trading on a Price/Earnings ratio of almost 23 on 23^rd June 2016, which is at lifetime highs. But does this mean the JSE is now very overvalued and risky? And why is the overall index at risk of correction if only a few large cap counters are overvalued? Dwaine explains the impact of this phenomenon of ’declining market breadth’ or ’severe selectivity’.

In AJ Cillier’s article this month, we look at a slightly different approach to investing. Instead of studying the performance of various funds in a chosen sector, what if we concentrate on identifying the best fund manager in the sector? Two Chinese academics recently researched this very question, and set out to identify common (and some surprising) characteristics of success. Read AJ’s article to find out what you should be looking for in a good fund manager. 

Wishing you good reading and a successful month’s investing.

Top reads for July

New GICS Sector: A Tailwind For Listed Property?
On Thursday, 1 September 2016, the newly created Real Estate sector will begin recording its first set of trades.

JSE Valuation Now In Unchartered Territory
The J203:JSE ALL-SHARE index was trading on a Price/Earnings (P/E) ratio of almost 23 on 23^rd June 2016. Not only is this way above one standard deviation of the long term regression mean, it is at lifetime highs. 

How To Choose A Fund Manager
When considering a unit trust investment, most investors weigh up the performance of various funds to determine which one is best.  But perhaps we should ignore fund performance and concentrate instead on identifying the best fund manager.

Natalie Mayer

Editor